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Why Entrepreneurs Should Know about Financing Receivables

Financing receivables is an asset-financing agreement in which a company uses money owed by customers as collateral. Invoice factoring companies in Austell, GA, provide an amount of money upfront equal to the value of your accounts receivable, less a service fee. 

Why Consider Accounts Receivable Financing?

  • It provides quick access to working capital without all of the bureaucracy and long waiting periods associated with a bank or SBA business loan.
  • It removes worry and lets you focus on core aspects of your business. Just be aware that going to an invoice factoring company isn’t the same as going to a bank. In most cases, even if your credit is far from perfect the factoring company will still be able to fund you as their approval is based on the quality of your receivables.
  • Invoice factoring services in Austell, GA, provide a range of solutions to help businesses succeed and grow.

Are There Disadvantages?

Financing receivables can cost a little more than financing through traditional lenders. However, most businesses that decide to use this option consider the tradeoff for getting the money fast worth the difference.

When to Consider

Here are a few situations when you might want to consider financing receivables in Austell, GA:

  • Your customers are taking so much time to pay you that your business is facing a lack of operating funds.
  • You need immediate money to make payroll or cover other essential costs.
  • Your clients are established and well-known. Factoring agencies aren’t interested in accounts that are better suited for a collection agency or small-claims court.
  • You need to focus on sales, not on collections. Let the factoring company take that responsibility from you and pay you for your invoices as the same time, leaving you to grow your business.
  • You’re confident the clients will pay eventually since, in most cases, you’ll be responsible for paying back the debt to the factoring company if they don’t.

Financing your receivables improves cash flow and provides funds to operate your business. Accounts receivable factoring operates in much the same way as a line of credit. If your business needs money fast, consider selling your accounts receivable to an invoice factoring company.